11
Jan
10

Home Buyer Tax Credit – Part 1: Existing Home Owners

Looking for a new home, but not sure that now is the right time?  What would you say if you could get up to $8,000.00 for moving into that new dream home you have been driving by every weekend.  With the Home Buyer Tax Credit which is part of The American Recovery and Reinvestment Act of 2009 you can do just that.  But, you need to get moving on it because the deadline is April 30, 2010 to have your contracts signed and in effect, and you must take possession of your new home by June 30, 2010 to qualify.

This date is quickly approaching for existing home owners looking to move up.   If you have a home to sell you need to get it on the market and get it sold.  Even though sales are picking up and inventories are coming down in Longmont it can still take a while to get your house sold.  Selling your home is a priority before buying your new one, so part one of this two part post will focus on existing home buyers.  I have summarized some important points below about your tax credit, but you should always consult your tax advisor before making your final decisions.

As your real estate agent I can help you navigate the ins-and-outs of the tax credit, contact me so we can make sure you don’t miss out on your money!

Existing Home Buyer’s Credit

The Existing Home Buyer’s Tax Credit was made possible by the extension of the First Time Home Buyers Tax Credit in November of 2009.  In addition to extending the amount of time that the tax credit was available and increasing the amount that first time home buyers qualified for, it also expanded the tax credit to include existing home owners.  The highlights of this extension are below.  Contact me if you have any questions.

The Money

  • $6500.00 in the form of a tax credit on your 2009 or 2010 tax return when purchasing a replacement primary residence.  This is a tax credit, not a deduction so you will get the full amount back in your tax refund after filing your taxes.  This amount is reduced if your income exceeds the cap, and is eliminated all together at some levels (see the Who Qualifies section below).
  • May be Monetized – Under certain circumstances the tax rebate may be monetized prior to filing your taxes and applied toward the down payment on your mortgage if you are using a FHA insured loan.  Read more on the HUD website, or contact a mortgage professional for more information.
  • $800,000 is the maximum cost of the home that is being purchased.

The Dates

  • April 30, 2010 – You must buy or enter into a binding contract to buy your new home.
  • June 30, 2010 – You must close and take possession of your new home.
  • April 15, 2010 – 2009 tax return is due.   Buyers who are making a qualified purchase in 2009 or 2010 may claim the purchase on their 2009 tax return.  If the purchase/contract date is made after the 15th of April an extension may need to be filed to claim the rebate on your 2009 return.
  • April 15, 2011 – 2010 tax return is due.  Buyers who made qualifying purchases in 2010 can claim their rebate on their 2010 tax return.

Who Qualifies

  • Long Term Residents of their homes who have owned the home for 5 out of the last 8 years, but do not qualify for the first time buyer status.  A long term resident, is defined as having owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.
  • Single income of up to $125,000. This is your modified adjusted gross income (MAGI). If your MAGI is $125,000 to $145,000 you are eligible for a reduced credit. If you’re over $145,000 you are out of luck.
  • Joint income of up to $225,000. Similar to the single income, if you file your taxes jointly and your MAGI is $225,000 to $245,000 you are eligible for a reduced credit.  If you’re over $245,000 you are out of luck.

References

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Mandy Wormke, Realtor
Keller Williams
606 Mt. View Ave.
Longmont, CO 80501

303.776.3200 (office)
303.548.4158 (cell)
mandywormke@kw.com

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